Israel’s Communication Market:
2019 Roundup and Forecasts for 2020
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The year 2019 was accompanied by many developments in the Israeli communications arena, the most notable being the unprecedented penetration of online content services into the Israeli television market. During this year, Internet-based, local and international content services became major players in the multi-channel television market. This is in addition to Netflix, whose penetration into the Israeli market was significantly high during 2019.
These changes raise significant legal and regulatory challenges: While content distribution via broadcast, cable or satellite is subject to extensive regulation regarding ownership, content production obligations, and limitations on commercials; similar services distributed via the Internet, such as Cellcom TV or Netflix, are not subject to any of such regulations due to outdated regulatory laws. This issue of "playground imbalance" between the competitors in the Israeli television market is expected to receive regulatory and legislative attention in the near future, especially noting that the major cable and satellite services in Israel – HOT and YES - began adopting Internet-based distribution technologies (OTT) as well.
In addition, 2019 faced the Israeli telecom companies with operational challenges, as the hyper-aggressive competition in the Internet, cellular, and TV markets resulted in declining revenues. Those challenges are likely to lead to future mergers and acquisitions in the Israeli telecom market, subject to antitrust and regulatory approval.
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Forecasts for 2020 in the Israeli Telecom and Media Arena
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Cellular: Upcoming Deployment of 5G Networks
During 2020, the Israeli Ministry of Communications is expected to complete one of the most important infrastructure tenders for the cellular market, commonly known as the "5G Tender". Although its title, this tender intends to stimulate the Israeli cellular market by enabling all existing cellular operators to complete the deployment of 4G technology and to facilitate them, as well as enabling new operators to make an initial investment in 5G technology.
Although the tender had already been published in 2018, its execution depends on the outcome of an administrative petition that Cellcom filed at the end of the year against the tender's pricing method.
Media and Digital Television: Update to Regulatory Legislation?
The governmental review of the outdated regulatory legislation on media regulation matured at the end of 2018 into a detailed legislative memorandum intended to bind all commercial audio-visual services, both traditional and new, to the same regulatory governance. This proposed legislation aims to “even the playground” by imposing on Internet-based content services the similar content duties which currently applied only to cable or satellite services.
The increasing market share of digital content providers within the Israeli market over the past year is expected to lead the Ministry of Communications to advance legislation in this spirit, in the near future, in light of the "playground imbalance" in the television and content market.
Telecom: Deployment of Ultra-Fast Internet (Fiber) Infrastructures
At the end of 2019, the Israeli Ministry of Communication published its upcoming policy outlines for the deployment of an ultra-fast telecommunications infrastructure in 2020. Although the deployment of fiber infrastructure already began in recent years, these new guidelines indicate a substantial change of the regulatory approach, which, for the first time, adopts a softened approach to the universal deployment obligations that burdens current deployment efforts. This outline, expected to be implemented during 2020, is of utmost importance to the Israeli telecom groups that have already begun to deploy fiber infrastructures, especially Bezeq, Cellcom and Partner. However, given that the execution of the policy update requires regulatory legislation, the current political climate could cause further delay in its implementation.
We will continue to keep you updated and wish you all the very best for 2020.
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This overview was authored by Dr. Asaf Wiener, who recently joined our Telecom & Media Department. Dr. Wiener served as an adjunct professor of Media Law & Policy at Tel Aviv University and was involved in formulating legislation and policy reforms for the Ministry of Communication and the Israeli Democracy Institute. His research on Media & Internet Regulation was presented to various regulatory agencies (Israel Competition Authority, the Israeli Broadcast Regulator) and were published in prestigious international journals.
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Telecoms & Media department
The firm is one of the most prominent in Israel in the telecoms and media sector, and our department is consistently ranked in the top tiers in both local and foreign ranking directories.
The firm’s clients in the communications sector include many of the largest and renown companies in communications and media in Israel, including “yes”, Bezeq, Partner, the investigative television program “Uvda” (“Fact”), various production companies, a regional radio station, and more.
For further reading about our Telecoms & Media Department click here.
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Hadas Bekel, Co-head of the Telecoms & Media department
Phone: +972-3-7770310
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